Magnitude and frequency of power signals always present certain dynamic characteristics， while fault happens during power system is in active power low frequency oscillation. Both above factors reduce the accuracy of traditional fault locating algorithm for three-terminal transmission lines. Thus， a new fault locating algorithm for three-terminal transmission lines under dynamic conditions is proposed. The new algorithm extends traditional static signal model and builds a time-variable signal model in order to properly show dynamic characteristics of the signal. After using the adjoining signal phasor estimated from synchronous phasor measurement units（PMUs）， this algorithm can be used to correctly identify the fault branch and estimate the line parameters under dynamic conditions. And finally an accurate estimate of fault location can be attained via a Newton iteration method. The performance of the proposed algorithm is evaluated by simulation of various operation situation with PSCAD/EMTDC software. Simulation results show that the proposed technique yields a more accurate fault locating algorithm than traditional static state algorithm and is independent of fault locations， fault impedance， and fault types.